The yen fell against the dollar and the euro after Japanese Vice Finance Minister Kazuyuki Sugimoto said “excessive moves” in currencies may hurt the economy. Japan’s currency dropped versus the Brazilian real, the Australian dollar and the South African rand as Sugimoto told reporters in Tokyo today that bolstering the economy is now the government’s “top priority.” India’s rupee climbed the most in two decades on speculation Prime Minister Manmohan Singh’s election victory will support growth. “There’s verbal intervention out of Japan again, which checked the yen’s strength a bit,” said Fabian Eliasson, vice president of currency sales at Mizuho Corporate Bank Ltd. in New York. “They are sending a signal that they are concerned about currency moves.” The yen weakened 0.5 percent to 95.70 per dollar at 9:39 a.m. in New York, from 95.21 on May 15, paring its gain this month to 3 percent. The yen depreciated 0.7 percent to 129.30 per euro from 128.43. The euro traded at $1.3512, compared with $1.3495 last week. Japan’s currency gained 11 percent versus the dollar since the collapse of Lehman Brothers Holdings Inc. last September as investors sought refuge from global financial turmoil. “Excessive moves in currencies are undesirable as they would have a negative effect on the Japanese economy,” Sugimoto said today. “We’ll continue to monitor currency markets.” The yen extended declines after Japan’s local and foreign- currency debt ratings were brought to the same level, Aa2, by Moody’s Investors Service to reflect that the repayment risk for each is equal. Yen and Exporters Waning global sales and a stronger currency hurt Japan’s exporters this year. Toyota Motor Corp. expects global sales to fall by 1.067 million vehicles to 6.5 million in the year ending March 31 and is predicting another annual loss. The greenback dropped versus the Australian and New Zealand dollars and the South African rand after U.S. stock-index futures gained, reducing demand for the world’s main reserve currency as a haven. The Australian dollar rose 1.2 percent to 75.78 U.S. cents, extending its advance in the past month to 4.9 percent. New Zealand’s dollar increased 0.7 percent to 58.90 cents and was up 3.7 percent from a month earlier. The rand appreciated 1.1 percent to 8.6184 per dollar. The Dollar Index, used by the ICE to track the U.S. currency versus the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona, fell 0.2 percent to 82.879. India’s Rupee India’s rupee jumped 3.1 percent to 47.9212 per dollar after touching 47.7700, the strongest since Dec. 26, as Singh’s ruling Congress party won its most seats since 1991, enabling the party to start forming a new government today without the support of Communist lawmakers. “Congress now has a free hand to pursue economic and market reforms,” currency strategists at Royal Bank of Scotland Group Plc wrote in a report today. “It will encourage foreign investment inflows and help allay earlier fears of a sharp increase in the budget deficit. It’s positive news for the rupee and Indian equities.” The pound advanced 0.8 percent to $1.5305 and 0.7 percent to 88.28 pence per euro as sterling’s 22 percent drop against the dollar in the past year made it attractive to investors. Investors from Millennium Asset Management to Mellon Capital Management Corp. are betting the pound’s losses are coming to an end. Sterling’s plunge made Britain the first choice when Schroders Plc started buying real estate in Europe last month. ‘Weaker Sterling’ “Weaker sterling makes U.K. property more attractive,” said Neil Turner, the Wiesbaden, Germany-based executive in charge of the money manager’s new 300 million-euro property fund. “The U.K. property market is a screaming buy compared to rivals in continental Europe.” Europe’s currency may fall against the pound, weakening to 88 pence this week and 84 pence by year-end, according to Commerzbank AG. The euro dropped 1 percent versus the dollar and 0.7 percent versus the pound last week after the European Union’s statistics office said on May 15 that gross domestic product of the 16 nations that use the euro contracted 2.5 percent in the first quarter, the most in at least 13 years. “Friday’s nasty euro-zone GDP data and the associated foreign-exchange moves were a firm reminder that so far there is less negative news priced into the euro than into other European currencies,” a Commerzbank team led by Ulrich Leuchtmann in Frankfurt wrote in a report today. “Against this background, the upside in euro-pound remains capped to the 90 pence area.” Weber’s Stance Axel Weber, a European Central Bank Governing Council member, said in a speech in Dusseldorf today the bank’s monetary policy is increasingly stabilizing the economy. Providing banks with as much money as needed is “of particular importance” and extending the maturities of the loans “certainly will push the yield curve even lower.” The central bank announced a plan on May 7 to buy 60 billion euros ($80.6 billion) of covered bonds to help keep borrowing costs down.

Source